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| Abstract
(of title) |
A
written summary of the title history of a particular piece of real
estate. |
 |
| Acceleration
Clause |
A
provision of a mortgage or note which provides that the entire outstanding
balance will become due and payable in the event of default. |
|
| Adjustable
Rate Mortgage (ARM) |
A
mortgage in which the interest rate is adjusted periodically, based
on the movement of a financial index. |
|
| Amortization |
Repayment
of loan by installment payments. As the payments are made, the debt
is reduced so that at the end of fixed period or term, no money
will be owed. |
|
| Annual
Percentage Rate (APR) |
The
annual percentage rate refers to the total cost of the loan, expressed
as a yearly rate. |
|
| Application
Fee |
That
part of the closing costs pre-paid to the lender at time of application
to cover initial expenses. |
|
| Appraisal |
A
report made by a qualified person as to the value of a property
as of a given date. |
|
| Assessed
Value |
The
value placed on a piece of real estate by the taxing authority for
the purpose of taxation. Also called an assessment. |
|
| Assumption
of Mortgage |
The
purchaser takes over mortgage payments for the balance of the loan,
assuming primary liability. Unless specifically released by the
lender, the seller remains secondarily liable. |
|
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| Balloon
Mortgage |
A
mortgage with periodic payments that do not fully amortize the loan.
The outstanding balance of the mortgage is due in a lump sum at
the end of the term. |
|
| Bridge
Loan |
A
short-term loan secured by the equity in an as-yet-unsold house,
with the funds to be used for a down payment and/or closing costs
on a new house. There is no payment of principal until the house
is sold or the end of the loan term, whichever comes first. Interest
payments may or may not be deferred until the house is sold. |
|
| Broker |
The
person who, for a commission or a fee, brings parties together and
assists in negotiating contracts between them. |
|
| Buydown |
Money
advanced by an individual (e.g. builder, seller, buyer, lender,
developer) to lower monthly mortgage payments for a few years or
the whole term. |
|
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| Cap
(interest rate) |
The
maximum interest rate increase allowable on an adjustable rate mortgage.
Does not result in negative amortization. See Negative amortization. |
|
| Cap
(payment rate) |
The
maximum payment amount increase allowable on an adjustable rate
mortgage. May result in negative amortization. See Negative amortization. |
|
| Certificate
Of Title |
A
statement that shows ownership of property, stating that the seller
has clear legal title. |
|
| Closing |
The
concluding day of the real estate transaction, when title and deed
pass from seller to buyer, the buyer signs the mortgage and pays
the purchase price and closing costs. |
|
| Closing
Costs |
Expenses
(over and above the price of the property) incurred by buyers and
sellers in transferring ownership of a property. Also called "settlement
costs." |
|
| Closing
Statement |
A
financial disclosure giving an account of all funds received and
expected at closing, including the escrow deposit for taxes, hazard
insurance and mortgage insurance for the escrow account. |
|
| Commission |
An
agent's or broker's fee for bringing the principals together and
helping to negotiate a real estate transaction, often a percentage
of the sales price or flat fee. |
|
| Commitment |
An
agreement, frequently in writing, between a lender and a borrower
to loan money at a future date, subject to certain conditions. |
|
| Comparables |
Refers
to similar properties used for comparison purposes in the appraisal
process. These properties will be reasonably the same size and location,
with similar amenities and characteristics, so that the approximate
fair market value of the subject property can be determined. |
|
| Condominium |
Ownership
of a single unit in a multiunit building or complex of buildings.
Along with this goes a share of ownership of the common areas. |
|
| Contingency |
A
condition that must be met for a contract or a commitment to remain
binding. |
|
| Conventional
Mortgage |
Any
mortgage loan that is not insured by FHA, guaranteed by VA, of funded
by a government authorized bond sale or grant. |
|
| Convey |
To
transfer real estate from one person to another. |
|
| Credit
Report |
The
report to a prospective lender on the credit standing of a prospective
borrower. |
|
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| Deed |
A
legal written document by which title to property is transferred. |
|
| Default |
Failure
to fulfill the terms as agreed to in the mortgage of note. |
|
| Down
Payment |
The
difference between the sale price of a property and the mortgage
amount. |
|
| Due-On-Sale |
A
clause in a mortgage which gives the lender the right to require
immediate repayment of a mortgage balance if the property changes
hands. |
|
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| Earnest
Money |
The
deposit money given to seller or his agent by the potential buyer
at the time of the purchase offer. If the offer is accepted, the
money will become part of the down payment. |
|
| Easement |
A
right to the limited use of land owned by another. An electric company,
for example, could have an easement to put up electric power lines
over someone's property. |
|
| Encumbrance |
Anything
that affects or limits the title to a property, such as outstanding
mortgages, easement rights or unpaid back taxes. |
|
| Equity |
The
value in which the owner has in real estate over and above the mortgages
against it. When the mortgage and all other debts against the property
are paid in full, the owner has 100% equity in his property. |
|
| Escrow |
Funds
and/ or deed left in trust to a third party. Generally, a portion
of the monthly mortgage payment is held in escrow by the lender
to pay for taxes, hazard insurance and yearly mortgage insurance
premiums. |
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| First
Mortgage |
A
mortgage that has a primary lien against a property. |
|
| Fixed-Rates
Mortgage |
A
mortgage with an interest rate and monthly payments that remain
constant over the life of the loan. |
|
| Fixture |
Property,
such as a hot water heater or plumbing fixture, that has become
permanently attached to piece of real estate and goes with the property
when it is sold. |
|
| Flood
Certification |
An
independent agency report required by the lender to determine whether
a property is located in a flood hazard zone, which would then require
a federally mandated flood insurance policy. |
|
| Foreclosure |
A
legal procedure in which property mortgaged as security for a loan
is sold to pay the defaulting borrower's debt. |
|
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Graduated
Payment
Mortgage |
A
fixed rate loan with monthly payments that start low, increasing
by a fixed amount for a specific number of years. After that period,
the payments typically remain constant for the duration of the loan. |
|
| Gross
Income |
Normal
income, including overtime, prior to any payroll deductions, that
is regular and dependable. This income may come from more than one
source. |
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| hazard
Insurance |
Insurance
protection against damage to a property from fire, windstorms, and
other common hazards. |
|
| Homeowner's
Insurance |
An
insurance policy that covers the dwelling and its contents in case
of fire or wind damage, theft, liability for property damage and
personal liability. |
|
| HUD-1
Form |
See
Real Estate Settlement Statement. |
|
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| Income
Property |
Real
estate that is owned for investment purposes and not used as the
owner's residence. |
|
| Interest |
A
charge paid for the use of money. |
|
| Interim
Financing |
See
Bridge Loan. |
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| No
Terms Listed |
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| No
Terms Listed |
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| Land
Contract |
When
the buyer agrees to make payments directly to the seller at pre-negotiated
terms. The seller agrees to deed the property to the buyer upon
completion of the agreement. The buyer becomes the owner of equity
in this type of sale. (Also see Owner Financing) |
|
| Lien |
A
legal claim on a property used as security for a debt. |
|
| Loan-To-Value
Ratio |
The
relationship between the amount of the mortgage and property value,
usually shown as a percentage. |
|
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| Market
Value |
The
price at which a property will sell, assuming a knowledgeable buyer
and seller, both operating without undue pressure. |
|
| Mortgage |
A
contract in which a borrower's property is pledged as security for
a loan which is to be repaid on an installment basis. |
|
| Mortgage
Note |
A
written promise to pay a debt at a stated interest rate during a
specified term. The agreement is secured by a mortgage. |
|
| Mortgagee |
The
lender in a mortgage contract. |
|
| Mortgagor |
The
borrower in a mortgage contract. |
|
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| Negative
Amortization |
A
loan in which the outstanding principal balance goes up instead
of down because the monthly payments are not large enough to cover
the full amount of interest due. Also called deferred interest. |
|
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| Offer
to Purchase |
A
written proposal to buy a piece of real estate that becomes binding
when accepted by the seller. Also called a sales contract. |
|
| Origination
Fee |
A
fee charged for the work involved in the evaluation preparation
and submission of a proposed mortgage loan. |
|
| Owner
Financing |
A
purchase in which the seller provides all or part of the financing. |
|
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P - |
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| PITI |
An
acronym for payments to lender that cover principal, interest, taxes
and insurance on a property. |
|
| Plat |
A
map of a piece of land showing boundary lines, streets, actual measurements
and easements. |
|
| Point |
A
fee paid to the lender on closing day to increase the effective
yield of the mortgage. A point is one percent of the amount of the
mortgage loan. Also called a discount point. |
|
| Prepayment
Penalty |
A
charge paid to the lender by the borrower if a mortgage loan is
repaid before its term is over. |
|
| Pre-Approval |
A
commitment by a lender to extend credit provided that specific conditions
are met. |
|
| Pre-Qualification |
A
preliminary assessment of a buyer's ability to secure a loan, based
on a specific set of lending guidelines and buyer representations
made. This is not a guarantee or commitment by a lender to extend
credit. |
|
| Prime
Rate |
The
interest rate charged by banks to their preferred corporate customers,
it tends to be an estimator for general trends in short term interest
rates. |
|
| Principal |
The
amount borrowed or remaining unpaid; also, that part of the monthly
payment that reduces the outstanding balance of a mortgage. |
|
| PMI
(Private Mortgage Insurance) |
Insurance
written by a private company to protect the lender against loss
caused by mortgage default. |
|
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| Qualifying
Ratios |
Guidelines
applied by lenders to determine how large a loan to grant a home
buyer. |
|
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R - |
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| Real
Estate Settlement Statement |
Final
settlement statement often referred to as the HUD-1 form, used to
itemize buyer, seller, broker, and lender charges and credits at
closing. |
|
| Realtor |
A
real estate broker or sales associate affiliated with the National
Association of Realtors. |
|
| Recording
Fee |
The
charges made by the register of deeds to record the legal documents. |
|
| Refinancing |
Repaying
a debt with the proceeds of a new loan, using the same property
as collateral or security. |
|
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| Second
Mortgage |
A
loan on property which already has an existing mortgage(the first
mortgage). The second mortgage is subordinate to the first. |
|
| Secondary
Mortgage Market |
The
buying and selling of existing mortgages through agencies (i.e.
Fannie Mae, Freddie Mac). |
|
| Survey |
A
map prepared by an engineer or surveyor charting a particular piece
of real estate. |
|
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| Title |
Ownership
of a property. A clear title is one without any outstanding liens
or encumbrances. A cloud on title refers to any outstanding liens
or encumbrances which could impair the title. |
|
| Title
Insurance Policy |
Protection
against financial loss arising from defects in the title occurring
before purchase. |
|
| Title
Search |
A
check of public record to disclose the past and current facts regarding
ownership of a particular piece of property. |
|
| Transfer
Tax |
In
some areas city, county or state taxes imposed when property passes
from one person to another. |
|
| Truth-In-Lending |
A
federal law that requires lenders to fully disclose, in writing,
the terms and conditions of a mortgage, including the APR and other
charges. |
|
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U - |
TOP |
| Underwriting |
The
process of evaluating a loan application to determine the risk involved
for the lender. |
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V - |
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| No
Terms Listed |
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W - |
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| No
Terms Listed |
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X - |
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| No
Terms Listed |
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Y - |
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| No
Terms Listed |
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| No
Terms Listed |
